Axis Real Estate Investment Trust · MYX:AXREIT
Axis Real Estate Investment Trust — Q2 2014 Earnings Presentation
79 slides from Axis Real Estate Investment Trust's earnings presentation, Aug 5, 2014
Slide 1: Unaudited 30 June 2014 Results
Axis Real Estate Investment Trust Unaudited 30 June 2014 Results Analysts Briefing , Westin Kuala Lumpur, 5 August 2014
Slide 2: Financial Highlights for 1H 2014
a Financial Highlights for 1H 2014
Slide 3: A Quick Snapshot
A Quick a Snapshot Finance Report YTD 1H 2014 Total Net Income (RM' 000) 43,064 Income Available for Distribution ("Realised") (RM' 000) 52,615 Earnings per Unit ("EPU") ("Realised") (Sen) 9.34 Income Distribution Declared (RM'000) 49,022 Distribution per Unit* ("DPU") (Sen) 10.60 Number of Investme
Slide 4: Milestones
Milestones a Finance Report Completed the disposal of Axis Plaza on 25 March 2014; recorded a distributable gain of RM10.952 million. Declared a total of 10.60sen DPU for the 1H2014 which includes 67% of the distributable gain on Axis Plaza; the balance 33% distributable gain will be distributed
Slide 5: Return Comparatives
a Return Comparatives Finance Report 19.9% 20.0% 18.0% 16.0% 14.0% 12.0% 10.0% 8.0% 6.2% 6.0% 6.0% 4.00% 4.0% 3.15% 3.25% 2.5% 2.0% 0.0% Axis-REIT Total Axis-REIT EPF Dividend 10-yr MGS 12 Months FD Saving Deposit OPR Return * Distribution Yield Return Rate Rate * (based on DPU from operations + gai
Slide 6: Our Strategy
Our strategy a Finance Report Targeting Growth in our asset class. To build on our SUKUK presence in the market. To continue to improve on our capital management. Continue to enhance existing assets to drive value and income. Trading of assets to reward our Unitholders. Best Practices and
Slide 7: Income Statement 2Q 2014 vs 2Q 2013
Income Statement 2Qa 2014 vs 2Q 2013 2Q 2014 2Q 2013 Changes / (RM ‘000) (RM’000) Movement No. of Properties 30 31 -1 Property Income 34,839 35,223 - 1.1% Property Expenses (5,379) (5,247) + 2.5% Net Property Income 29,460 29,976 - 1.7% Profit Income 246 252 Non-Property Expenses (3,339) (3,127) + 6
Slide 8: Income Statement 1H 2014 vs 1H 2013
Income Statement 1Ha 2014 vs 1H 2013 1H 2014 1H 2013 Changes / (RM ‘000) (RM’000) Movement No. of Properties 30 31 -1 Property Income - Note 1 70,251 70,115 + 0.2% Property Expenses - Note 2 (11,219) (10,352) + 8.4% Net Property Income 59,032 59,763 - 1.2% Profit Income 430 365 Gain on disposal of i
Slide 9: Income Statement 1H 2014 vs 1H 2013: Notes on Property Income and Expenses
Income Statement 1Ha 2014 vs 1H 2013 Note 1 – Property Income Property income is slightly higher as compared to the preceding half year. The loss of rental from Axis Business Campus for the 1st half of this year (due to the enhancement) is mitigated by positive rental reversion in 2014 and the highe
Slide 10: Computation of Distributable Gain on Disposal
Income Statement 1Ha 2014 vs 1H 2013 Computation of Distributable Gain on Disposal: RM'000 Disposal price 34,000 Less: Current book value (32,034) 1,966 Less : Incidental cost Legal fees - SPA (85) Valuation fees (8) Disposal fee (180) Defect repair works (79) (352) Gain on Disposal recognized in in
Slide 11: Note 3 – Gain on disposal
Income Statement 1Ha 2014 vs 1H 2013 Note 3 – Gain on disposal of investment The disposal of Axis Plaza, which was completed on the 25 March 2014, has resulted in a total realized gain on disposal of RM10,952,000 (“Gain on disposal”) which is represented by the gain on disposal of RM1,614,000 and re
Slide 12: Income Statement 1H 2014 vs 1H 2013: Non-Property Expenses and Financing Cost
a 2014 vs 1H 2013 Income Statement 1H Finance Report Note 4 – Non-Property Expenses The MER of the Fund as at 30 June 2014 is 1.30% of NAV as compared to 1.26% for 2013. The increase is due to increase in the Manager’s and Trustee’s fees which resulted from the increase in the NAV of the Fund. Note
Slide 13: Gross Yield Of Investment Properties
a Gross Yield Of Investment Properties Finance Report 17.80% 18.00% 17.39% Average gross yield: 10.75% 16.00% 15.22% 13.74% 14.00% 12.95% 12.07% 12.25% 12.25% 12.00% 11.60% 11.16% 11.05% 10.63% 10.64% 10.88% 10.55% 10.76% 10.46% 9.97% 9.88% 10.00% 9.51% 9.04% 8.93% 9.02% 8.32% 8.43% 8.65% 8.29% 8.00
Slide 14: Net Yield Of Investment Properties
a Properties/ Cost Net Yield Of Investment Finance Report 16.00% 14.95% Average net yield per property: 9.03% 14.00% 12.56% 12.67% 12.00% 11.59% 10.91% 10.89% 9.38% 10.19% 10.07% 9.91% 9.98% 10.00% 9.68% 9.66% 9.24% 9.20% 8.75% 8.79% 8.27% 8.45% 8.38% 8.49% 8.37% 7.64% 7.82% 7.98% 8.00% 7.37% 6.30%
Slide 15: Income Statement: Adjusted Income Before Taxation
a Income Statement Finance Report 35.00 Adjusted Income Before Taxation/ Income Available For Distribution: Gain on 30.00 disposal RM10.952 mil Gain on disposal RM7.3 mil 25.00 Gain on disposal RM5.9 mil 20.00 RM' million 15.00 21.21 21.32 21.45 31.78 20.83 10.00 20.54 5.00 - 1Q 2013 2Q 2013 3Q 2013
Slide 16: Second Interim Income Distribution 2014 – 5.3 sen
a Income Distribution Second 2014 Interim Finance Report 2nd Interim Distribution 2014 – 5.3 sen The 5.30 sen DPU is based on 99% income available for distribution from performance of properties and a 33.9% gain on disposal of Axis Plaza (second tranche). This payment together with the 1st interim i
Slide 17: Details of 1st IDRP 2014
a Details of 1st IDRP 2014 Finance Report Details of the 2014 IDRP (in conjunction with 2014 First Interim Income Distribution): Electable portion : 2.20 sen out of the 5.30 sen Exercise price : RM3.20; representing 5.9% discount to 5-days VWAMP RM3.4005 Subscription rate : 84% Net amount converted
Slide 18: Summary of EPU (Realized) and DPU
a Summary of EPU (Realized) and DPU Finance Report 20.00 18.60 18.60 18.46 18.50 18.00 Increasing DPU y-o-y 17.28 17.20 since listing 15.77 15.80 16.01 16.00 16.00 15.27 15.46 14.00 13.60 13.63 12.82 12.95 12.00 10.60 sen per unit 10.00 9.34 8.00 6.00 4.87 4.70 4.00 2.00 - 2005 2006 2007 2008 2009 2
Slide 19: Statement of Financial Positions
a Statement of Financial Positions 30/6/14 31/12/13 (RM’000) (RM’000) Changes Investment Properties – Note 1 1,548,297 1,543,248 + 5,049 Fixed Assets 2,513 2,407 + 106 Other Assets – Note 2 35,357 70,868 - 35,511 TOTAL ASSETS 1,586,167 1,616,523 - 30,356 Borrowings – Note 3 503,501 528,004 - 24,503
Slide 20: Statement of Financial Positions: Notes
a Statement of Financial Positions Finance Report Note 1 – Investment properties A total of RM5.049 million was as enhancement in the first half of 2014. Note 2 – Other assets Trade receivables dropped by 81%. The average collection for first half 2014 has reduced to 2 days as shown below: For Perio
Slide 21: Statement of Financial Positions: Borrowings
a Statement of Financial Positions Finance Report Note 3 – Borrowings 2006 2007 2008 2009 2010 2011 2012 2013 1H 2014 Total Borrowings (RM’000) 88,089 209,816 230,456 308,932 416,609 311,338 548,920 528,004 503,501 Total Assets (RM’000) 411,781 581,857 726,371 907,745 1,208,897 1,298,431 1,589,408 1
Slide 22: Gearing Levels
a Statement of Financial Positions Placements Undertaken Finance Report 40.0% 38.2% 36.0% 37.5% Gearing Levels 36.1% 35.4% 36.0% 34.5% 34.0% 34.5% 34.2% 33.9% 35.0% 32.7% 31.7% 33.1% 32.6% 33.0% 32.7% 32.5%31.7% 31.2% 31.8% 31.3% 30.0% 30.0% 29.1% 28.8% 26.8% 27.3% 25.0% 25.0% 23.7% 23.5% 24.0% 22.4
Slide 23: Non-distributable reserve
a Statement of Financial Positions Finance Report Note 4 – Non-distributable reserve Non-distributable reserve mainly comprises the favorable gain in fair value of approx. RM241 million to date. 45 41.88 40 Revaluation Reserve to date (on individual property) 34.79 35 30 24.57 RM' Millions 25 21.57
Slide 24: Placement for Year 2014
Placement for Yeara2014 Finance Report Placement of 83,579,942* units Mandate from unitholders renewed on 29 April 2014. Expected to raise approximately RM280.0 million. Timing : Early October 2014 to coincide with the completion of the new acquisitions. * The earlier approved placement unit
Slide 25: Placement for Year 2014: Asset Growth
Placement for Yeara2014 Finance Report 2,500.0 The funds raised from equity 2,020.2 2,000.0 placements are being injected into acquiring good 1,616.5 quality properties….. 1,589.4 1,586.2 1,500.0 1,298.4 RM mil 1,208.9 1,030.0 1,000.0 907.7 726.4 728.2 735.4 751.0 758.8 581.8 540.3 500.0 411.8 406.9
Slide 26: Return to unitholders
a Return to unitholders Finance Report … resulting in good total returns to unitholders . 320% 280% 280% 240% 115% 200% 160% 146% 151% 120% 52% 104% 62% 80% 165% 36% 55% 40% 84% 99% 20% 68% 35% 0% IPO @ RM1.25 Placement '08 @ RM1.80 Placement '09 @ RM1.66 Placement '10 @ RM1.97 Placement '11 @ RM2.4
Slide 27: Report on Revaluation of properties
a Report on Revaluation of properties
Slide 28: Revaluation of properties
a Revaluation of properties Finance Report There were no revaluations conducted in the 1H2014 28
Slide 29: Property Report
a Property Report
Slide 30: Key Metrics
Key Metrics a Portfolio Size: As at 30 June 2014 the Portfolio have 30 assets comprising 5,325,101 sq. ft. and 129 tenants Portfolio Performance: Type 2Q2014 1Q2014 Movement Property Income (RM'000) 34,839 35,412 - 1.62% Property Expenses (RM'000) 5,379 5,840 - 7.89% Net Property Income (RM'000) 29,
Slide 31: Space Under Management (Sq Ft)
a Space Under Management (Sq Ft)
Slide 32: Lease Expiry Profile
Lease Expiry Profilea Year % of % of Rental Year % of % of Rental Year % of % of Rental Property 2014 Total NLA Income/month 2015 Total NLA Income/month 2016 Total NLA Income/month Menara Axis 54,587 1.03 0.37 - - 0.00 91,514 1.72 0.56 Crystal Plaza 81,339 1.53 0.47 3,407 0.06 0.01 120,122 2.26 0.73
Slide 33: Income Growth – Rental Reversions
Income Growth – aRental Reversions Space Renegotiated % Rent Movement Properties (Sq. Ft.) As at 2Q 2014 MENARA AXIS 7,724 +5.21% CRYSTAL PLAZA 7,746 +9.91% AXIS BUSINESS PARK 95,947 +13.91% INFINITE CENTRE 8,895 +10.00% WISMA KEMAJUAN 3,571 +4.66% AXIS EUREKA* +15.91% SPLW 3 395,225 No change QUATT
Slide 34: Income Growth – Lease Renewal & Rental Reversions
a Income Growth – Lease Renewal & Rental Reversions The Manager has successfully renegotiated 1,305,288 sq. ft. of space for 2Q 2014 out of 1,825,948 sq. ft. space due for renewal in 2014. 71% tenants retention rate achieved. Rental growth of 470,147 sq. ft. space achieved from pre-negotiated
Slide 35: Portfolio Occupancy
a Rate Portfolio Occupancy As at 30 June 2014 Axis REIT has 11 out of 30 properties that carry vacancy. 19 properties enjoy 100% occupancy. Occupancy As at 31 March 2014 93.23% As at 30 June 2014 91.95% Vacancy As at 30 June 2014 8.05% For Axis Multi-tenanted Buildings Q2 2014 Occupancy Rate is 82.9
Slide 36: Potential DPU upside 4.6 sen per unit/year
a Rate Portfolio Occupancy Vacancy As at 30 June 2014 8.05% Spaces to be let out 428,555 sq. ft. Unbilled spaces income RM21.3 million per year Potential DPU upside 4.6 sen per unit/ year
Slide 37: Occupancy Rates by Property
a As at 30 June 2014 Occupancy Rates by Property 120.00 100.00 91.95% 80.00 Just Completed Enhancement 60.00 40.00 20.00 -
Slide 38: Diversified Portfolio
Diversified Portfolioa Portfolio Diversification by Type and Diversification 11.45% Office Office/ 29.02% Industrial Hypermarkets 6.98% Logistic 44.51% Warehouses Manufcturing 8.04% Facilities 0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 30.00% 35.00% 40.00% 45.00%
Slide 39: Portfolio Location
Portfolio Location Cyberjaya Penang Kedah Johor Klang Shah Alam Petaling Jaya Portfolio Analysis by Geographical Location and NLA 11.33% 05% 8.79% 37.58 0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 30.00% 35.00% 40.00%
Slide 40: Tenancy Mix: Single Tenant Vs Multi-Tenants
Tenancy Mix a Single Tenant Vs Multi-Tenants
Slide 41: Occupancy: Properties Below 90%
a Occupancy Properties Below 90% Occupancy rates of properties below 90% as of 30 June 2014 Just completed enhancement/ CCC obtained Note: Vacant space Fontera HQ is built for their future expansion
Slide 42: Weighted Average Lease Expiry (WALE)
a Expiry (“WALE”) Weighted Average Lease The Average “WALE” For the Portfolio is: By Year Q2 2014 Q1 2014 By NLA 4.04 3.94 By Rental 4.12 3.99 Note: WALE has improved with lease renewal of some single tenant properties.
Slide 43: Portfolio Efficiency
Portfolio Efficiency a(“PE”) The Efficiency Ratio (“ER”) ER= The Operating Cost for the Portfolio / Gross Property Income 2Q2014 1Q2014 15.97% 16.49%
Slide 44: Rental Covenants: Top Tenants
a Rental Covenants Top 10 Tenants - Strong 1. Konsortium Logistik Bhd 2. LF Logistics Services (M) Sdn Bhd 3. Schenker Logistics (M) Sdn Bhd 4. Tenaga Nasional Berhad 5. Tesco Stores (M) Sdn Bhd 6. DHL Properties (M) Sdn Bhd 7. Strateq Data Center Sdn Bhd 8. Scope International (M) Sdn Bhd 9. GCH Re
Slide 45: Asset Enhancement Initiatives
a Asset Enhancement Initiatives
Slide 46: Axis Business Campus West Block (Before)
a Axis Business Campus West Block (Before)
Slide 47: Axis Business Campus West Block (After)
a Axis Business Campus West Block (After )
Slide 48: Axis Business Campus South Block (Before)
a Axis Business Campus South Block (Before)
Slide 49: Axis Business Campus South Block (After)
a Axis Business Campus South Block (After)
Slide 50: Refurbishment Axis Business Campus Overall (After)
a Refurbishment Axis Busienss Campus Overall (After)
Slide 51: West Block Axis Business Campus
a West Block Axis Business Campus Drop off New Ramp for Handicapped Persons New Lift Lobbies New Common Toilets
Slide 52: South Block Axis Business Campus
a South Block Axis Business Campus New Patio Drop Off Cargo Loading Bay New Cargo Lift
Slide 53: Axis Business Campus – Projected ROI
a – Projected ROI Axis Business Campus Project Analysis Axis Business Initial Cost : RM 34,173,526.21 Campus (ABC) Redevelopment : RM 23,639,326.00 Total cost : RM 57,812,852.21 NLA : 155,401 sq. ft. Estimated Property Income : RM 7,600,000 Projected Gross Yield: 13%
Slide 54: Refurbishment Axis Business Park Block C
a C Refurbishment Axis Business Park Block
Slide 55: Refurbishment Axis Business Park Block C
a C Refurbishment Axis Business Park Block Lift Lobby Entrance Lobby F&B Corner
Slide 56: Axis Business Park Block C – Projected ROI
a C – Projected ROI Axis Business Park Block Project Analysis ABP Block C Initial Cost : RM 46,393,274 Refurbishment Redevelopment : RM 10,000,000 (est.) Total cost : RM 56,393,274 NLA : 182,187 sq. ft. Number of Car parks: 166 Estimated Property Income : RM 7,200,000 Projected Gross Yield : 12.76%
Slide 57: Wisma Academy Annex Redevelopment
a Wisma Academy Annex Redevelopment
Slide 58: Wisma Academy Annex Redevelopment
a Wisma Academy Annex Redevelopment
Slide 59: Wisma Academy Annex Redevelopment – Projected ROI
a Wisma Academy Annex Redevelopment – Projected ROI Project Analysis Annex Initial Cost : RM 12,289,272.25 Redevelopment Redevelopment : RM 30,000,000.00 (est.) Total cost : RM 42,289,272.25 NLA : 127,133 sq. ft. (30% office & 70% warehouse) Number of Car Parks: 266 Estimated Gross Property Income :
Slide 60: Property Awards
Property Awards a AXIS BUSINESS CAMPUS WINS INTERNATIONAL PROPERTY AWARD FOR COMMERCIAL RENOVATION/ REFURBISHMENT IN MALASYIA AND ASIA PACIFIC Axis REIT walked away as winners at the prestigious Asia Pacific Property Awards 2014, taking home 2 awards for Axis Business Campus. At the awards ceremony
Slide 61: Sustainability Initiatives
a Sustainability Initiatives Committee had second meeting on 27 June 2014 and initiated the followings: Became a Corporate Member of Malaysia Green Building Confederation on 12 May 2014 Initiatives Action Drafting company sustainability policy Done. Policy focus on environmental preservation, social
Slide 62: Investor Relations Report
Investor Relations Report AtslS REAL ESTATE INVESTMENT TRUST
Slide 63: Price/Volume Performance
a Price/Volume Performance 3.80 3.30 3.50 3.40 3.38 3.37 3.31 3.09 2.80 2.85 2.30 1.80 Jan Feb Mar Apr May Jun Jul 20,000,000 16,913,000 15,000,000 13,903,000 9,308,000 10,000,000 5,635,500 4,744,600 4,015,400 4,066,200 5,000,000 - Jan Feb Mar Apr May Jun Jul • Prices rose steadily after the 4Q 2013
Slide 64: KLCI vs AXREIT
KLCI vs AXREIT a 1 Jan 2013 – 30 July 2014 Price & Volume Statistics 140% Unit Price 30 July 2014 RM 3.40 KLCI vs AXREIT: 1 Jan 130% Unit Price @ 31 Dec 2013 RM 2.93 Unit Price @ 30 June 2014 RM 3.31 120% Highest Price 1H2014 RM 3.55 110% (April 2014) Lowest Price 1Q 2014 RM 2.80 100% (January 2014)
Slide 65: Top 10 Unitholders
a Top 10 Unitholders 1 EMPLOYEES PROVIDENT FUND 2 SKIM AMANAH SAHAM BUMIPUTERA 3 KUMPULAN WANG PERSARAAN (DIPERBADANKAN) 4 TEW PENG HWEE @ TEOH PENG HWEE 5 ALEX LEE LAO 6 EXEMPT AN FOR AIA BHD. 7 DATO’ CARL GUNNAR MYHRE 8 AS 1 MALAYSIA 9 AMANAH SAHAM DIDIK 10 PUBLIC SMALLCAP FUND Top Unitholders’Per
Slide 66: Improving Investor Visibility & Liquidity
a & Liquidity Improving Investor Visibility No. of CDS Accounts 3,500 3,242 3,228 3,009 3,000 2,850 2,702 2,420 2,500 2,080 2,000 1,652 1,500 1,000 500 - 2008 2009 2010 2011 2012 2013 1Q2014 2Q2014 Quarter-on-quarter, total number of CDS accounts decreased by 14 to 3,228. Total foreign holdings
Slide 67: Business Development Report
a Business Development Report
Slide 68: Current Acquisitions
Current Acquisitions a Entered into SPAs for 3 related party assets on 4 August 2014. Total purchase price for all 3 RPTs – RM280.5 million. All 3 RPTs assets are located in core locations in Shah Alam: • SADC 2 - Section 16 • SADC 3 – Section 33 • Axis MRO Hub – Section 15 Entered into a Le
Slide 69: Location of the RPT assets – Core Locations in Shah Alam
Location of the RPT assets- Corea Locations in Shah Alam AXIS MRO Hub SADC 2 SADC 3 69
Slide 70: SADC 3 – Section 33
SADC 3 – Section 33 a Building C – LF Logistics Building A&B – Konsortium Logistik 70
Slide 71: SADC 3 – Section 33 Details
SADC 3 – Section 33 a Land Area : Approximately 23 acres Gross floor area : Total – approx 694,000 sf : Building A & B – approx 362,000 sf (Konsortium Logistik) : Building C – approx 331,000 sf (LF Logistics) Land Tenure : Freehold Occupancy : 100% Solar panel leases : Approx 297,000sf of roof space
Slide 72: SADC 2 – Section 16
SADC 2 – Section 16 a 72
Slide 73: SADC 2 – Section 16 Details
SADC 2 – Section 16 a Land Area : Approximately 6 acres Gross floor area : 171,650 sf Land Tenure : Leasehold expiring 8 August 2066 Occupancy : 100% Solar panel leases : Approx 145,000sf of roof space Purchase Price : RM45 million Valuation : RM46 million Projected initial net yield : 7.0% 73 WALE
Slide 74: Axis MRO Hub – Section 15
Axis MRO Hub – Section a15 74
Slide 75: Axis MRO Hub – Section 15 Details
Axis MRO Hub – Section a15 Land Area : Approximately 3 acres Gross floor area : Total – approx 172,000 sf Land Tenure : Leasehold – exp 12 Jan 2086 Occupancy : 100% Purchase Price : RM52.5 million Valuation : RM53 million Projected initial net yield : 7.07% Overall WALE : Approx 7 years 75
Slide 76: Summary of Acquisitions Under Due Diligence
a Under Due Diligence Summary of Acquisitions Entered into a Letter of Offer for the purchase of an industrial facility located in Johor for a purchase price of RM153.5 million with a 15+15 year lease at an estimated net yield of 7.2% Entered into a Letter of Offer for the purchase of an industr
Slide 77: Impact on DPU
Impact on DPU a The acquisition of these 5 assets will be yield accretive. Calculation is based post placement. Annualised Estimated DPU enhancement. 2.1 sen / unit. 77
Slide 78: Summary of Future Acquisitions
a Summary of Future Acquisitions An Industrial facility in Selangor An DC facility in Port Klang Total value of assets currently under negotiation is RM 97 Million 78
Slide 79: Thank you
a Thank you
Axis Real Estate Investment Trust — Q2 2014 Earnings Presentation on 6ix